Main viewpoints
The global chlortetracycline leader with steady growth in income
The company is a joint-stock enterprise mainly engaged in the production and sale of chlortetracycline premix and animal health products, the main products include chlortetracycline premix, chlortetracycline hydrochloride, chlortetracycline, oxytetracycline and a series of animal protection preparations, corn starch and by-products. There are more than 30 kinds of veterinary biological products, such as pig ring, swine blue ear disease and swine fever vaccine, among which the core product chlortetracycline premix has a comprehensive annual production capacity of 55000 tons. For the world's leading production and sales, brand advantages of animal protection products. From 2011 to 2019, the company's operating income increased from 721 million yuan to 1.782 billion yuan, and the overall CAGR+11.98%, showed a steady growth trend; the net profit of returning to the mother increased from 77.4 million yuan in 2011 to 164 million yuan in 2016. after that, with the continuous removal of live pigs, the company's net profit began to decline and began to stabilize and pick up in 2018.
In the first three quarters of 2020, due to the impact of the African classical swine fever epidemic, the downstream pig production capacity was greatly reduced, the company achieved revenue of 1.207 billion yuan, yoy-3.33%; achieved a net profit of 102 million yuan, yoy-28.84%.
Rapid recovery of pig production capacity & forbidden resistance of feed and simultaneous increase of quantity and price of chlortetracycline
Chlortetracycline is mainly used as feed additive. From the supply side, the chlortetracycline industry shows typical oligopoly characteristics, with a global production capacity of about 108,000 tons / year. The company and CP Group (Pucheng Zhengda biochemical Co., Ltd., Zhumadian Huazhong CP Co., Ltd.) are the main manufacturers in the industry. Among them, the company has a production capacity of 53,000 tons per year, and CP Group has a production capacity of 45,000 tons per year, accounting for 49.07% and 41.67% respectively. It presents a typical pattern of oligarchic competition. From the demand side point of view, the rapid recovery of downstream pig production capacity-feed ban policy implementation, chlortetracycline demand will continue to improve. On the whole, in the context of booming demand and limited supply, chlortetracycline has huge room for price increase, and the company's performance is more flexible. At the same time, the company plans to invest 664.587 million yuan to build a new project with an annual output of 52000 tons of veterinary high-efficiency chlortetracycline and 1000 tons of chlortetracycline hydrochloride, which is expected to further increase the company's profits.
The strategic layout of the animal protection plate is expected to grow into a new profit growth point for the company.
The company has laid out the animal protection plate for many years, and the main subsidiary Hangzhou Youben Animal Vaccine Co., Ltd. is technologically mature, covering pig vaccine, poultry vaccine, cattle and sheep vaccine and so on. From 2016 to 2018, the company's veterinary vaccine revenue increased from 41.39 million yuan to 124 million yuan. In CAGR+72.81%,2019, due to the rapid decline in pig production capacity, the company's veterinary vaccine revenue fell by 30% to 86.53 million yuan. In 2020, under the stimulation of high profit of breeding & policy support, the production capacity of pigs downstream is recovering rapidly. at the same time, under the background that there is no effective vaccine on the market, the breeding threshold has risen sharply, and the market share of large farming groups has increased steadily. Under the background of rapid recovery of production capacity & increased concentration, the company's animal protection performance is outstanding. We believe that the market space of the animal protection sector is relatively large, and the company is based on the "big animal protection strategy. In the next three to five years, veterinary biological products will become a vital growth engine for the company, contributing to a sustained increase in profits.
Investment suggestion
As the adjustment of the company's chlortetracycline sales channel requires a certain adaptation process, we reduce the company's operating income from 2020-2021 to 18.77max 23.01 (the previous value is 23.64 / 2.988 billion yuan), and correspondingly reduce the net profit attributable to the mother to 15883m (the previous value is 323max). 487 million). Taking into account the company's chlortetracycline capacity expansion and the continuous development of the animal protection plate, we forecast that the company's revenue in 2022 will be 2.84 billion yuan, and the net profit will be 468 million yuan. To sum up, we estimate that from 2020 to 2022, the EPS of the company will be 0.25max 0.45x0.74 respectively, and the current stock price will correspond to 25max 14max 8X respectively. With reference to the comparable company's 2021 27.73XPE, we will give the company 27-28XPE in 2021, corresponding to the target price of 12.15-12.60RMB, and maintain the "buy" rating.
Risk hint
The risk of rising prices of raw materials, the risk of abnormal exchange rate fluctuations, the risk of new product market development not up to expectations, the risk of policy disturbance.